Canadian taxpayers are required to annually report certain properties that are situated outside of Canada when the aggregate COST of all properties is $100,000 CAD or more. The reporting is completed on the T1135 form titled, Foreign Income Verification Statement.
What is considered foreign property for purposes of Form T1135?
The foreign property you are required to report on form T1135 includes:
- Funds (all currencies) situated, deposited, or held outside Canada
- Intangible property (patents, copyrights, etc.) situated, deposited, or held outside Canada
- Tangible property situated outside of Canada
- A share of the capital stock of a non-resident corporation held by the taxpayer or by an agent on behalf of the taxpayer (includes shares held in a Canadian brokerage account)
- An interest in a non-resident trust
- An interest in a partnership that holds a foreign property included in this list
- An interest in, or right with respect to, an entity that is a non-resident
- A property that is convertible into, exchangeable for, or confers a right to acquire
- A property that is foreign property included in this list
- A debt owed by a non-resident, including government and corporate bonds, debentures, mortgages, and notes receivable
- An interest in a foreign insurance policy
- Precious metals, gold certificates, and futures contracts held outside Canada
You do not have to report the following properties on form T1135:
- A property used or held exclusively in carrying on an active business
- A share of the capital stock or indebtedness of a foreign affiliate *use caution in corporate groups when a related Canadian person (corporate, individual, trust) has balances owing from the foreign affiliate throughout the year
- Some foreign pension plans such as a US IRA
- A personal-use property which would include real estate outside of Canada that is for personal use only (i.e. it is not rented out or used for business purposes)
- An interest in, or a right to acquire, any of the above-noted excluded foreign property
The above are not exhaustive lists and there could be specific facts on your foreign properties that exempt you from reporting them on the T1135. Talk to your advisor about your fact-specific situation or any changes in your situation on all properties situated outside of Canada.
You can complete the form electronically via an Excel form or fillable PDF and provide it to your tax advisor when preparing your tax return for 2022. The due date of the T1135 is the same due date as your personal tax return.
If you have any of these properties, the aggregate total cost for all of them is greater than $100,000 CAD and you have not filed the T1135 information return in previous years, please start the communication with your advisor to understand if there are steps to be undertaken for your situation.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.